LONDON (Reuters) -The U.S. government shutdown extends into another week, earnings season is in full swing, U.S./China trade tensions are tense and there’s plenty of data to mull over.
Japan’s parliament meanwhile may vote on a new prime minister and Bolivia holds a key election.
Here’s all you need to know about the week ahead in world markets by Lewis Krauskopf in New York, Rocky Swift in Tokyo and Amanda Cooper, Naomi Rovnick and Marc Jones in London.
1/ US EARNINGS, INFLATION UPDATE ON WAY
U.S. corporate earnings rev up, with Tesla and Netflix, while next week ends with a delayed U.S. inflation release.
After major banks kicked off Q3 earnings, the coming week will see reports from an array of industries, including consumer companies Procter & Gamble and Coca-Cola, aerospace and defense giant RTX and tech stalwart IBM.
Investors have also been confronting a government data blackout due to the federal shutdown that began on October 1. While key data including the monthly employment report have been delayed, the government plans to publish September CPI numbers next Friday, allowing the Social Security Administration to meet deadlines related to payment of benefits.
The CPI release comes just ahead of the Federal Reserve’s October 28-29 meeting, when the central bank is widely expected to cut rates by a quarter percentage point.
2/ BIG MOMENT FOR TAKAICHI
Japanese markets await an expected parliamentary vote next week that may spur another leg up in a record stocks run.
The blue-chip Nikkei hit all-time highs after Sanae Takaichi, a devotee of the “Abenomics” stimulus policies of the late Shinzo Abe, won a ruling Liberal Democratic Party election on October 4.
That’s normally a shoo-in to become the prime minister, but the LDP is weakened. A diet vote to install her as premier has been delayed after Takaichi failed to heal a rift with a long-time coalition partner and rival parties tried to team up to form their own government.
The Nikkei hit a speed bump, and a volatility measure of the index surged to the highest since April.
Now the Japan Innovation Party has emerged as a possible saviour after its leader pledged support for Takaichi if the two sides can agree on policy.
3/ EARLY WARNING SIGNS
It has been six months since U.S. President Donald Trump unveiled his “Liberation Day” tariffs.
There are trade deals in place and investors and companies have some certainty. Or at least, they did until recently.
Tensions are flaring again between Washington and Beijing, prompting tit-for-tat fees on cargo ships and ports, a tightening on two-way supplies of key tech-sector materials and parts and a general heating up in rhetoric.
Europe hasn’t yet seen evidence of the big spending that national governments, led by Germany, promised earlier this year. China is slowing too.
The upcoming surveys of business activity for Germany, France, the UK, the U.S. and euro zone, among other regions, in October could start to reflect some of that renewed angst.
4/ STILL HIGH UK INFLATION?
UK inflation data next week could be pivotal for Britain’s gilt markets, sterling and finance minister Rachel Reeves’ ability to limit unpopular tax hikes and spending cuts in her November 26 budget.
With Britain’s fiscal hole widening because of surging debt payments, Wednesday’s September consumer prices report could fuel rate cut bets and offer Reeves some relief if the annualised print comes below the Bank of England’s 4% forecast.
But a higher-than-expected increase could keep the BoE cautious and Britain’s finances looking precarious, in a threat to sterling’s recent strong run against the dollar.
Gilt markets are exhibiting optimism so far, with UK borrowing costs falling to over two-month lows as traders priced a 90% probability of a quarter-point rate cut by February.
5/ VOTING AND VULTURES
Bolivia’s presidential election runoff vote on Sunday will be a historic moment, formally ending almost two decades of near-continuous socialist rule.
The debt market vultures will be watching closely. The economy is in deep disarray, with inflation running at nearly 25%, fuel shortages rife and the country’s foreign exchange reserves now barely covering two months of basic imports.
With a meltdown potentially looming, the two candidates in Sunday’s vote are battling over what to do.
Right-wing former President Jorge “Tuto” Quiroga, who has had a narrow lead in recent polls, wants the kind of chainsaw-style reforms Javier Milei has adopted in neighbouring Argentina, including potentially a debt writeoff.
Centrist rival Rodrigo Paz, meanwhile, is advocating for a more gradualist approach, fully aware of the country’s long history of violent unrest at times of economic pain.
(Compiled by Dhara Ranasinghe, Graphics by Kripa Jayaram; Editing by Elaine Hardcastle)
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